The-Relationship-Of-Service-Quality-To-Client-Satisfaction-In-An-Accounting-Firm-Setting

Koski, Middle Tennessee State University Abstract This paper presents the results of a study using the marketing-based SERVQUAL scale to examine the relationship between service qualit

The Relationship Of Service Quality

To Client Satisfaction In An Accounting Firm Setting

Carl L Saxby, University of Southern Indiana Craig R Ehlen, (Email: CEHLEN@usi.edu), University of Southern Indiana

Timothy R Koski, Middle Tennessee State University

Abstract

This paper presents the results of a study using the marketing-based SERVQUAL scale to examine

the relationship between service quality and client satisfaction in an accounting firm setting

Us-ing a sample of 154 clients, we confirm that service quality is positively related in clients’

satisfac-tion with their accounting firm More importantly, we examine the individual dimensions of

ser-vice quality to provide insight into specific steps accounting firms can take to increase client

satis-faction

INTRODUCTION

he marketing literature has long been cognizant that service quality can contribute to success among competing service providers In fact, Hoffman and Bateson (1997, p 299) suggest that where there are many firms offering nearly identical services within a limited geographic area, “establishing ser-vice quality may be the only way of differentiating oneself.” Accounting is a serser-vice based on rules and regulations that are identical from one business to another, and generally there are many potential accounting firms within a li-mited geographic area Thus, providing high levels of service quality – as perceived by clients – is a critical

strateg-ic goal for accounting firms

Measuring service quality is important to accounting firms because higher levels of service quality are as-sociated with higher levels of customer satisfaction Higher levels of customer satisfaction lead, in turn, to repeat business and ultimately to higher levels of income Thus, accounting firms should be concerned with maximizing service quality Accounting firms should be particularly concerned about clients’ perceptions of service quality in light of the negative publicity the profession received surrounding Arthur Andersen’s role in the collapse of Enron Corporation

One measure of service quality frequently used in marketing research is the SERVQUAL scale (Parasura-man, Berry, and Zeithaml, 1988) This paper reports the results of a study using the SERVQUAL scale to examine the relationship between service quality and client satisfaction in an accounting firm setting Consistent with prior research, we find that service quality is positively related to client satisfaction We then examine the individual components of the SERVQUAL scale to provide insight into what accounting firms can do to improve client satis-faction A detailed examination of the individual components of the SERVQUAL scale will provide accounting firms with information that will assist them in taking specific steps designed to increase client satisfaction

LITERATURE REVIEW AND RESEARCH QUESTIONS

The conceptual model of service quality (Parasuraman, Zeithaml, and Berry, 1985) explains the quality of service received in terms of “gaps.” While five potential gaps are identified in the model, only one – the service gap

Readers with comments or questions are encouraged to contact the authors via email

T

– is particularly relevant in the current research The relevant service gap is any difference between the customers’ perceptions of the quality of service actually delivered and their prior service quality expectations Essentially, early

service quality theory held that people form expectations a priori and then compare the perceived actual

perfor-mance to their prior expectations When expectations exceed perforperfor-mance – a negative gap – there is dissatisfaction from low perceived service quality A very close match of expectations to performance produces perceived service quality and satisfaction A positive gap – performance exceeding expectations – generates customer delight More recent research has shown that perceived performance alone is an accurate predictor of service quality and satisfac-tion (Cronin and Taylor, 1992; Teas, 1994)

The SERVQUAL scale (Parasuraman, Berry, and Zeithaml, 1988) measures five dimensions of service quality using two similar 22-item sections that record customers’ expectations and perceptions, respectively The five dimensions of service quality measured by the SERVQUAL scale encompass tangible aspects (service person-nel and physical facilities appear neat and professional), reliability factors (ability to meet deadlines and produce er-ror-free results), responsiveness (prompt service, employees willing to help immediately), assurance levels (ade-quate technical knowledge, secure transactions, inspires confidence), and empathy factors (gives personal attention, operates at convenient hours) Because of concerns regarding the length of the scale and research showing that per-ceived performance alone is an accurate predictor of quality and satisfaction (Cronin and Taylor, 1992; Teas, 1994),

we used an instrument measuring clients’ perceptions regarding service quality in the current research The 22-item SERVQUAL scale used in this research is set forth in Exhibit 1

Exhibit 1 SERVQUAL Scale

Dimension of

Service Quality

Components of Service Quality Dimension – Actual Questions Asked

Tangible My CPA firm has up-to-date-equipment

My CPA firm’s physical facilities are visually appealing

My CPA firm’s employees are well dressed and appear neat

The appearance of the physical facilities of my CPA firm is in keeping with the type of services provided

Reliability When my CPA firm promises to do something by a certain time, it does so

When I have problems, my CPA firm is sympathetic and reassuring

My CPA firm is dependable

My CPA firm provides its services at the time it promises to do so

My CPA firm keeps its records accurately

Responsiveness My CPA Firm tells its customers exactly when services will be performed

I receive prompt service from my CPA firm’s employees

Employees of my CPA firm are always willing to help customers

Employees of my CPA firm respond to customer requests promptly

Assurance I can trust the employees of my CPA firm

I can feel safe in my transactions with my CPA firm’s employees

My CPA firm’s employees are polite

Employees of my CPA firm have the knowledge to answer my questions

Empathy My CPA firm gives me individual attention

My CPA firm’s employees give me personal attention

My CPA firm’s employees know what my needs are

My CPA firm has my best interests at heart

My CPA firm has convenient operating hours

The SERVQUAL scale has been extensively used in marketing research Researchers have begun to adapt the SERVQUAL scale to accounting Freeman and Dart (1993), Bojanic (1991), and Weekes, Scott, and Tidwell (1996) adapted versions of the SERVQUAL scale to accounting and found that all five dimensions of the scale were relevant to client perceptions of service quality Similarly, Turner, Aldhizer, and Shank (1999) adapted the

model was a viable method of assessing the quality of MAS provided by CPA firms Our research addresses client satisfaction with areas of service (audit, consulting, tax, and financial statement preparation) typically provided by CPA firms

Consistent with previous research, we predict that clients’ perception of service quality, as measured by the SERVQUAL scale, is positively associated with client satisfaction As stated in the null form:

H1: Clients’ perception of service quality is positively related to client satisfaction in an accounting firm

set-ting

More importantly, we undertook an in-depth examination of the individual items comprising the SERVQUAL scale

to determine which dimensions of service quality were most important to client satisfaction in an accounting firm setting Customers generally view reliability as the most important dimension of the SERVQUAL scale (Berry and Parasuraman, 1992) In addition, reliability has consistently been found to be significantly associated with client sa-tisfaction with professional service firms (see e.g., Turner, Aldhizer, and Shank, 1999) Consistent with research in other settings, we predict that accounting firm clients view reliability as the most important dimension of service quality As stated in the null form:

H2: The reliability dimension of service quality is the most important indicator of client satisfaction in an

ac-counting firm setting

We then examined those dimensions of service quality found to be most associated with client satisfaction and tested the significance of each item comprising the significant dimensions Knowing the details of which items

in a particular dimension clients perceive as important will assist accounting firms in establishing specific policies designed to improve client satisfaction

METHODOLOGY

This research was conducted by mail survey The survey instrument was developed by the researchers and designed to gather information on customers’ perceptions regarding their satisfaction with the quality of service pro-vided by their accounting firm As discussed earlier, recent research has shown that perceived performance alone is

an accurate predictor of service quality and satisfaction (Cronin and Taylor, 1992; Teas, 1994) Therefore, the sur-vey instrument contained 22 questions regarding clients’ perceptions of the five dimensions of service quality that comprise the SERVQUAL scale (Parasuraman, Zeithaml and Barry, 1985) (see Exhibit 1) Each of these items was measured on a five-point Likert-type scale

We also collected information on client satisfaction Client satisfaction was measured on a five-point Li-kert-type scale: The following five questions were designed to provide multiple measures of client satisfaction: (1)

“In general, I am pretty satisfied with my CPA firm,” (2) “Overall, my CPA firm is a good company to do business with,” (3) “I want to retain my CPA firm,” (4) “Overall, my CPA firm’s policies and programs benefit my compa-ny,” and (5) “Overall, my CPA firm is very fair.” The survey instrument also included questions for demographic and classification purposes

The survey was mailed to all 292 sole proprietorship, partnership, and corporate clients of a large regional accounting firm (Clients that were either estates or trusts and clients for whom preparing personal federal or state income tax returns was the only professional service rendered were not included in the sample.) The survey was addressed to the primary client contact person for coordinating professional services with the accounting firm A second request was sent to non-respondents one month after the original survey was mailed Usable responses were received from 154 clients, a response rate of 53%

SAMPLE CHARACTERISTICS

The 154 clients included in data analysis are a representative sample of the accounting firm’s clients As shown in Tables 1 and 2, the sample contained a wide range of industries and client sizes

Respondents were asked what percent of contact with their accounting firm was related to auditing, con-sulting, tax services, and financial statement preparation, respectively As reported in Table 3, respondents used their accounting firm for a wide variety of services

Tables 4 through 8 summarize the posi-tion, experience, gender, age, and education

lev-el of the person within each client firm who answered the survey Individual respondents held a variety of positions in their firms and had diverse experience and educational backgrounds

In general, however, the individual respondents were experienced professionals who held posi-tions of authority in their company The wide range of client firms and individual respondents included in the data analysis improves the gene-ralizability of our results

Table 1 Industry of Participating Clients

Industry Number Percent

Manufacturing 17 11.0

Construction 20 13.0

Wholesale/Retail 46 29.9

Not-for-profit 18 11.7

Health care 9 5.8

Other 42 27.3

Missing data 2 1.3

Total 154 100.0

Table 3 Type of Contact with Participating Clients

Type of Client Number Percent

Predominantly audit 28 18.2

Predominantly tax 57 37.0

Predominantly financial

statement preparation 21 13.6

Predominantly consulting 6 3.9

Uses several services 38 24.7

Missing data 4 2.6

Total 154 100.0

Table 4 Position of Individual Respondent

Position Number Percent

Owner/General Manger 46 29.9

President/CEO 52 33.8

Vice-President/CFO 15 9.7

Controller 19 12.3

Accounting Manager 11 7.1

Other 8 5.2

Missing data 3 2.0

Total 154 100.0

Table 5 Experience of Individual Respondent (Years in Industry)

Years of Experience Number Percent Less than 6 15 9.7

6 – 9 11 7.1

10 – 15 30 19.5

16 – 20 25 16.2

21 – 30 46 29.9 More than 30 21 13.6 Missing data 6 4.0 Total 154 100.0

Table 2 Size of Participating Clients

Annual Revenue Number Percent Less than $500,000 26 16.9

$500,001 - $2,000,000 43 27.9

$2,000,001 - $10,000,000 55 35.7

$10,000,001 - $20,000,000 14 9.1 Greater than $20,000,000 11 7.2 Missing data 5 3.2 Total 154 100.0

ANALYSIS OF RESULTS AND DISCUSSION Reliability Analysis and Factor Analysis

The five dimensions of the SERVQUAL scale were subjected to both a reliability analysis and a factor analysis Reliability scores for each dimension ex-ceeded 84 and are reported in Table 9

All elements of each dimension of service quality loaded on a single factor and explained at least 68.5% of the variance Factor analysis results are re-ported in Table 10

Relationship of Service Quality to Satisfaction

We added the five measures of relationship satisfaction to arrive at an overall satisfaction score Similarly,

we added the individual components of each dimension of service quality (tangibles, reliability, responsiveness, as-surance, empathy) to arrive at an overall score for each dimension The high reliability coefficients and that fact that the individual elements of each dimension of service quality loaded on a single factor made it appropriate to use summated measures of each dimension of service quality in data analysis The overall scores for each of the five service quality dimensions were then regressed against the overall satisfaction score to test whether service quality is related to client satisfaction The results are reported in Table 11 Service quality explains 55.4% of the variation in client satisfaction This supports Hypothesis One and provides evidence that service quality is positively related to client satisfaction in an accounting firm setting

Table 6 Gender of Individual Respondent

Table 7 Age of Individual Respondent

Table 8 Education Level of Individual Respondent

Education Level Number Percent

High school graduate 12 7.8

Some postgraduate study 18 11.7

Masters degree or more 24 15.6

Table 9 Reliability Analysis

Dimension of

Service Quality

Reliability Coefficient

Table 10 Factor Analysis Dimension of

Service Quality

Eigenvalues Percent of Variance

Explained

The positive relationship between service quality and client satisfaction did not vary as a function of the ei-ther the type of services performed (e.g., audit, tax, financial statement preparation, or consulting) or the personal characteristics (position in the firm, years of experience, gender, age, or education level) of the individual respon-dents

Consistent with Hypothesis Two, the reliability dimension of service quality was significant at the 001

lev-el The assurance dimension was significant at the 05 levlev-el The tangibles, responsiveness, and empathy dimen-sions were not significant These results suggest that accounting firms should concentrate their efforts on the items comprising the reliability and assurance dimensions of service quality The finding of no results for the tangibles factor is consistent with prior research on professional service firms (Turner, Aldhizer, and Shank, 1988) In fact, some researchers eliminate the tangible component of the SERVQUAL scale when dealing with professional service firms, including accounting firms (see Behn, Carcello, Hermanson, and Hermanson, 1997)

In order to determine whether accounting firms can benefit from concentrating their efforts on particular elements of reliability or assurance, we regressed the individual components of these dimensions on client satisfac-tion The regression of the individual components of reliability on client satisfaction is reported in Table 12

According to Berry and Parasuraman (1992), reliability is the most important criterion in evaluating service quality Reliability consists of both the dependability and accuracy components (Berry and Parasuraman, 1992) The item dealing with accuracy (keeps records accurately) is significant, while those dealing with dependability are only marginally significant It appears that accuracy is of paramount concern to accounting firm clients Timeliness (provides services at times promised), on the other hand, is not Accounting firms should strive to perform work ac-curately, even if it’s at the expense of timeliness

Assurance is the other dimension of service quality that was significant The regression of the four indi-vidual components of assurance on client satisfaction is reported in Table 13

The only individual component in the assurance dimension of service quality that was significant was whether the accounting firm has the knowledge necessary to answer questions Components dealing with trust and politeness were not significant The results on the trustworthy component, however, may have to be reexamined in light of the crisis in public confidence created by Arthur Andersen’s role in the Enron scandal

Table 11 Regression of Service Quality to Satisfaction (Total Satisfaction Score as the Dependent Variable)

Coefficients

Standard Error

Standardized Coefficients t-Statistic Sig

* Significant at the 001 level

** Significant at the 05 level

Model Summary:

R R Square

Adjusted R Square Standard

Error

The significant result for the knowledge portion of the assurance dimension of service quality illustrates the importance of proper employee training and lifelong learning Clients demand that their accounting firms be know-ledgeable of an ever-changing array of rules and regulations This finding illustrates the importance of continuing professional education to CPA firms and their employees

In conclusion, accounting firms can increase client satisfaction by concentrating on items that traditionally set certified public accountants apart from other professional firms – reliability and assurance Accounting firms should strive to be as current as possible on accounting regulations and make sure their clients are aware of their level of knowledge Providing clients with accurate answers is an important component of client satisfaction Ac-counting firms should stress continuing education to ensure they provide clients with accurate, up-to-date advice

Table 12 Analysis of Reliability Components of Service Quality

Unstandardized Coefficients

Standard Error

Standardized Coefficients t-Statistic Sig

Provides services at times

* Significant at the 01 level

Model Summary:

R R Square

Adjusted

R Square

Standard Error

Table 13 Analysis of Assurance Components of Service Quality

Unstandardized Coefficients

Standard Error

Standardized Coefficients t-Statistic Sig

Have knowledge to answer

* Significant at the 001 level

Model Summary

R R Square

Adjusted

R Square

Standard Error

Finally, accounting firms should take steps designed to ensure that their employees are sympathetic and reassuring

to clients 

REFERENCES

1 Behn, B., J Carcello, D Hermanson, and R Hermanson 1997 The determinants of audit client

satisfac-tion among clients of Big Six firms Accounting Horizons, (March): 7-24

2 Berry, L., and A Parasuraman 1992 Marketing Services: Competing Through Quality, New York: The

Free Press

3 Bojanic, D.1991 Quality Measurement in Professional Service Firms Journal of Professional Services

Marketing, 7, 2: 27-36

4 Cronin, J., Jr., and S Taylor 1992 Measuring service quality: A reexamination and extension Journal

of Marketing, 56, 3: 55-68

5 Freeman, D., and J Dart 1993 Measuring the perceived quality of professional business services

Jour-nal of ProfessioJour-nal Marketing Services, 9, 1: 27-47

6 Hoffman, D., and J Bateson 1997 Essentials of Service Marketing Fort Worth, TX: The Dryden Press

7 Parasuraman, A., L Berry, and V Zeithaml 1998 SERVQUAL: A multiple-item scale for measuring

customer perceptions of service quality Journal of Retailing, 64, 1: 12-40

8 Parasuraman, A., V Zeithaml, and L Berry 1985 A conceptual model of service quality and its

implica-tions for future research Journal of Marketing, 49, 4: 41-50

9 Teas, R 1994 Expectations as a comparison standard in measuring service quality: An assessment of a

reassessment Journal of Marketing, 58, 1: 132-139

10 Turner, L., G Aldhizer III, and M Shank 1999 Client perceptions of MAS quality as measured by a

marketing-based service quality model Accounting Horizons, 13, 1: 17-36

11 Weekes, D., M Scott, and P Tidwell 1996 Measuring quality and client satisfaction in professional

business services Journal of Professional Services Marketing, 14, 2: 25-37